Budgeting in Libraries

1. BUDGETARYBUDGETARY
CONTROLCONTROL
- A method of rationalization whereby estimates covering- A method of rationalization whereby estimates covering
different periods of time, are established for all anddifferent periods of time, are established for all and
everything that affects the life of business concern andeverything that affects the life of business concern and
that can be express in figures.that can be express in figures.
Budget – is also a device for central coordination,
communication, performance evaluation and
motivation

2. DIFFERENT TYPES OF BUDGETSDIFFERENT TYPES OF BUDGETS
• Operation Budgets – are the most
important( focus in revenue and
expenses)
• Capital Budget – developed to reflect the
expenditures over the estimated period of
a project’s development

3. BUDGETING TECHNIQUESBUDGETING TECHNIQUES
• Line-item – in which expenses are divided into
categories such as salaries, benefits, materials,
equipment etc.
• Lump-sum – or a total amount for the whole unit
under consideration
• Incremental budgets – in which percentage
increases are related to the previous year’s
budget.

4. BUDGET REQUEST FORM 1BUDGET REQUEST FORM 1
SUMMARYSUMMARY
Department or Program: LIBRARYDepartment or Program: LIBRARY
Department No.: 0286Department No.: 0286
For Fiscal Year: 1996-1997For Fiscal Year: 1996-1997
Control No. Expenditures Actual
Period
Year
1994-95
Budget
Current
Year
1995-96
Budget
Request
1996-97
100
101
102
103
104
105
106
107
108
109
110
SALARIES
Full-time emp.
Part-time emp.
Hourly wages
SAFF BENEFITS
Social Security
Retirement acct.
Unemployment Comp.
Worker’s Comp.
Life Insurance
Health Insurance
Accident Ins.
Disability Ins.
73,000
27,050
34,000
54,750
65,700
4,675
4,160
3,505
39,600
400
5,250
784,750
27,860
35,360
58,855
70,625
5,025
4,475
3,765
42,250
470
5,600
809,500
29,200
40,000
60,700
72,850
5,200
4,600
3,900
49,175
485
6,300
BUDGET REQUEST FORM 1
SUMMARY
Department or Program: LIBRARY
Department No.: 0286
For Fiscal Year: 1996-1997

5. 120
121
122
123
124
150
151
152
153
154
155
156
157
158
159
MATERIALS
Books
Serials
Binding
Media
Inst. Materials
OTHERS
Utilities
Supplies
Telephone
Travel
Postage
Insurance
Equipment
Vehicle Cost
Service Contracts
Consultants
TOTAL
120,000
180,000
36,000
86,500
17,000
39,000
25,500
22,000
19,200
9,500
8,000
23,700
17,600
15,800
3,850
1,592,590
127,200
165,500
37,800
92,300
17,850
40,150
26,500
22,880
19,975
9,975
8,450
36,500
18,850
16,600
3,850
1,683,415
137,375
180,400
40,450
97,650
18,750
42,150
27,825
23,950
20,975
10,475
8,900
38,300
19,800
17,450
3,850
1,770,210

6. FORMULA BUDGETSFORMULA BUDGETS
• Uses predetermined standards for allocation of
monetary resources
• The popularity of formula budgets over a
program-based budget is:
1) A formula budget is mechanical and easy to
prepare
2) Because of the formula budgets; application to
all institutions in the political jurisdiction, there
appears to be justification for monies
requested.

7. 3 Governing bodies has a sense of equity3 Governing bodies has a sense of equity
4 Fewer budgeting and planning skills are required
to prepare and administer a formal budget.
Additional advantage of formula budgets
• facilitate inter-institutional comparison
• facilitate comparison from year to year
• reduce paper work in the budgeting process
• eliminate extraneous details
• provide a systematic, objective allocation
technique

8. The formulae, which usually expressed in terms ofThe formulae, which usually expressed in terms of
percentage of the total institutional cost, focus onpercentage of the total institutional cost, focus on
input than activities, and are, therefore, moreinput than activities, and are, therefore, more
applicable to specific aspects of library operationapplicable to specific aspects of library operation
• Formulae that were developed by
“Standards for College Libraries” budget
standards, which relates three formulae
1 Holdings ( formula A)
2 Staff ( formula B)
3 facilities ( formula C)

9. FORMULA A-FORMULA A-
1. Basic collection 85,000 vols.1. Basic collection 85,000 vols.
2. Allowance per FTE faculty member 100 vols.2. Allowance per FTE faculty member 100 vols.
3. Allowance per FTE students 15 vols.3. Allowance per FTE students 15 vols.
4. Allowance per undergraduate 350 vols.4. Allowance per undergraduate 350 vols.
major or minor fieldmajor or minor field
5. Allowance per master’s field, when no 6,000 vols.5. Allowance per master’s field, when no 6,000 vols.
higher degree is offered in the fieldhigher degree is offered in the field
6. allowance per masters field, when 3,000 vols.6. allowance per masters field, when 3,000 vols.
a higher degree is offered in the fielda higher degree is offered in the field
7. Allowance per 67. Allowance per 6thth
-year 6,000 vols.-year 6,000 vols.
specialist degree field.specialist degree field.
8. Allowance per doctoral field 25,000 vols.8. Allowance per doctoral field 25,000 vols.
A “volume” is defined as a physical unit of a work which has beenA “volume” is defined as a physical unit of a work which has been
printed or otherwise produced, typewritten, handwritten etc.printed or otherwise produced, typewritten, handwritten etc.

10. Program BudgetingProgram Budgeting
• Introduced by U.S. President Lyndon Johnson
• Concerned with the organizations activities
• It’s approach maintains that it is possible to
relate the programs to accomplishment of
time/action objectives or activities that are stated
in output terms in strategic planning process.
• A program budget emphasizes the library’s
activities, so the money will be assigned to
programs or services provided.

11. Performance BudgetingPerformance Budgeting
• A technique similar to program budgeting
• Which bases expenditures on the
performance of the activities and
emphasizes efficiency of operations.
• measures quantity rather than quality of
service

12. Planning Programming Budgeting System (PPBS)Planning Programming Budgeting System (PPBS)
• Developed by Rand Corporation
• PPBS is a scientific approach to budgeting that
improves the decision-making process.
• Begins with establishment of goals and
objectives, but the controlling aspect of
measurement, which is paramount in
performance budgeting, is also part of PPBS.
• Emphasizes the cost of accomplishing goals set
by the library

13. The steps important in PPBS are:The steps important in PPBS are:
1. Identifying the objectives of the library
2. Presenting alternative ways to achieve
those objectives—with cost-benefit ratios
presented for each
3. Identifying the activities that are
necessary for each program
4. Evaluating the result so that corrective
actions can be taken

14. Zero-Based BudgetingZero-Based Budgeting
• ZBB focuses its activities on answering 2 basic
questions: a) are the current activities efficient
and effective? B) should current activities be
eliminated or reduced to fund higher-priority new
programs or to reduce the current budget?
• ZBB approach is not a procedure, but rather an
approach that requires organization to review
and evaluate each of their service programs and
activities on the basis of both output measures
as well as costs.

15. Developing techniques forDeveloping techniques for
allocating resourcesallocating resources
• Entrepreneurial budgeting- it allocates a pool of
money to the unit or organization that is then
responsible for managing it within the programs
priorities identified.
• It decentralize decision making with incentives to
be more innovative.
• Allocating Decision Accountability Performance
(ADAP)- combines the process of PPBS and
ZBB.
• Integrated Planning and Control System (IPCS)-
more useful in for-profit institutions.

16. • Best, Optimistic, and Pessimistic (BOP)- best assumes
normal operating condition, optimistic assumes that
there will be problems; but the problems can be
surmounted and pessimistic assumes the worst
• Responsibility Center Budget – forces decision making
down into all of those units where costs are directly
related to academic priorities
• Bracket Budgeting – is an analytical procedures that
completes conventional budgeting techniques.
• Software Applications- budgeting makes use of software
called an electronic spreadsheet that has become a
powerful tools in controlling process for libraries.
• Accounting and Reporting- includes all financial
communication from the business to outside users
including press releases, shareholder minutes,
management letters and analysis, auditor reports, and
even the notes of the financial statements.